Born in Sauk City, Wisconsin. Educated at The University of Wisconsin, B.A., 1930. Married: Sandra Winters,1953 (divorced, 1959), two children.

As a teenager, Derleth corresponded with H. P. Lovecraft (1890-1937), and subsequently spent much of his life in projects aimed at preserving HPL's memory. He and Donald Wandrei formed Arkham House in December, 1939, in order to bring out an omnibus volume of HPL's work. The result was The Outsider and Others (1939). Wandrei dropped out of the partnership to serve in World War II, leaving Derleth as the sole owner. Arkham House later included the imprints of Mycroft & Moran and Stanton & Lee.

Over the years Derleth wrote under several pseudonyms, including Will Garth, Stephen Grendon, Eldon Heath, Kenyon Holmes, Tally Mason, and Michael West. First genre publication: "Bat's Belfry" in Weird Tales (May, 1926); First novel: Murder Stalks the Wakely Family (Loring and Mussey, 1934) [a mystery]; First collection of stories: Place of Hawks, 1935; First SF collection: Harrigan's File (Arkham House, 1975) [his only non-edited book that can be considered pure SF]. He published the Arkham Collector.

Derleth's reputation was built almost equally upon four elements: 1) his regionalist fiction (written about a fictionalized Sauk City that he named Sac Prairie); his poetry; his detective fiction (much of which concerned his character Solar Pons, a pastiche of Sherlock Holmes); and his SF/fantasy/horror writing and editing, much of which paid tribute to Lovecraft.